Section 179 deduction for side business

[BanduraMaker]

I'm wondering if anyone here has any knowledge or experience using section 179? More info is here: Section 179 and Bonus Depreciation | Section179.Org

Basically, they're saying that any equipment or off the shelf software purchased in 2011 can be deducted/depreciated in full.

My specific question is how that applies to those of us with a small CNC machine used for a small side business.

In my own situation is this. I have a full time day job that has nothing to do with CNC. I purchased a CNC machine, CAD and CAM software for a total of about $16k this year. I will probably only make a few hundred dollars in sales this year as I'm ramping up my side business. I've received an EIN from the IRS but haven't filed for LLC or anything like that.

Will I be able to depreciate my equipment and software using section 179?

This could be huge for a lot of us if we can!!

[GVJeeper]

I'm not a tax person and can only tell you what my understanding is. You can take the entire deduction for this year but I believe you will need to file a Schedule C - Sole Proprietor Business. Usually the IRS wants to see a profit on your business in 2 or 3 out of the first 5 years (they understand ramping up). If you choose to deduct it all this year you will show a loss on the Sched C. That loss will give you a deduction on your 1040 against your income from your "real" job. But, I believe you can still opt to deduct the equipment over 5 years. Only your tax preparer can tell you which is best for you....all of it this year or spread it over 5 years. So, talk to a tax preparer. Again, this is just my understand but don't go by what I say...I'm not a tax preparer.